Aust-China free trade deal to be signed

Will be signed in Canberra on Wednesday. Australia has FTAs with US, Japan and Korea, but China is the big one.

WHAT'S THIS ABOUT?

China is Australia's biggest trading partner, buying almost a third of all exports, worth around $108 billion in 2013-14. It's Australia's top market for agriculture, services and resource exports. Chinese investment in Australia reached almost $65 billion last year.

Australia's exports to China could be a lot bigger. Treasurer Joe Hockey said the emergence of Asia's middle class will be the most transformative event in Australia's history. Think in terms of China's vast and increasingly wealthy middle class developing a taste for Australian beef, cheese and shiraz. The government says trade and investment with China is central to Australia's future prosperity.

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The immediate winners will be farmers. Tariffs on beef, which now range from 12-25 per cent, will be eliminated in nine years. All tariffs on dairy products (up to 20 per cent) will go in 4-11 years and 20 per cent pork tariffs will be eliminated in four years. Tariffs on a range of processed foods will go. Tariffs on Australian booze - up to 20 per cent on wine and 65 per cent on spirits - will go in four years.

THERE'S MUCH MORE:

ChAFTA locks in zero tariffs on resource exports including iron ore, gold, crude oils and LNG. Tariffs on other commodities including some types of coal, copper and alumina will go, as will tariffs on pharmaceuticals and vitamins.

All have growing markets in China. Australian opal exports were worth $4 million in 2014, yet account for just 0.2 per cent of China's total opal imports. Tariffs as high as 35 per cent for opal jewellery will go.

Australian deer velvet - the furry stuff on deer antlers used in Chinese medicine - attracts a tariff of 11 per cent. That will go in four years.

Australian sea cucumber exports to China were worth a modest $20,000 in 2014. Tariffs of 10-14 per cent will go.

WHAT'S IN IT FOR CHINA?

Remaining Australian tariffs on Chinese imports will be progressively eliminated. That includes five per cent on electronics and whitegoods. That means cheap Chinese products will be even cheaper.

WHAT'S THE DOWNSIDE?

ChAFTA opens the way for increased Australian investment in China and increased Chinese investment in Australia and that makes many people nervous. Seventy per cent of respondents in the 2015 Lowy poll reckon the government allows too much Chinese investment in Australian residential real estate.

The government says ChAFTA will promote further Chinese investment by liberalising the Foreign Investment Review Board screening threshold for private investors in non-sensitive sectors. There will still be screening for investment in agribusiness and sensitive sectors such as media, telecommunications and defence.

AND THE WORKERS?

Australia will grant working holiday visas to 5,000 Chinese each year.